The regulation revolution of the Convergence Review

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The Convergence Review is … complicated. Appropriately complicated, in some ways, because it takes a root-and-branch look at how we regulate media and communications, identifies the flaws and proposes a wholly new approach to it.

There are big problems with some of its proposals, yes, but it deserves a detailed look at what has driven them, something most critics seem unwilling to do, preferring to attack its recommendations as though they’ve dropped out of the sky.

And, actually, the sky is relevant, because the sky, and particularly the distance radio transmissions travel across it, is the basis for how we regulate media and deal with issues such as media diversity. Our entire media regulatory framework is based on radio licence areas, which are structured around ensuring major population centres can have radio services without them interfering with each other. It’s radio licence areas, for example, that form the basis of our rules about how many media groups there can be in an area, and how you can’t control groups across all three platforms.

This approach also means that we have no way to assess the national impact of media mergers — our laws don’t recognise the existence of a national dimension to the media, so the The Australian Financial Review and The Australian don’t even count as media outlets.

The review suggests abandoning radio licence areas as the basis for regulation. That’s the single most critical part of the review, by far, even if few commentators will pick it up. From that springs a huge chunk of the recommendations across several areas.

It instead recommends regulation based on local areas and a national media environment, in which a regulator would determine the relevant local area, not radio licences, and mergers of major groups would be assessed at a national level as well.

How the regulator does that is where the problems arise: once you take away hard-and-fast rules around radio licence areas, the regulator needs to make subjective judgments about what a local area is and who the important media groups are in it, although the review recommends some guidelines for this and recommends keeping some basic numerical rules about the minimum number of media groups in an area.

Subjectivity is also the problem for a public interest test, which would be the basis for assessments of national-level mergers by the regulator (bizarrely, Malcolm Turnbull issued a media release yesterday saying that Julia Gillard would be the one making such assessments); the review also recommends a “public benefit” exemption for local area mergers that might otherwise fall foul of minimum numbers. In short, there are an awful lot of subjective assessments that the regulator will need to make.

It also recommends abandoning the link between spectrum allocation and content licensing. This is a subtle point, but an important one: currently in broadcasting the two are linked – access to broadcast spectrum comes with the rights and obligations of a content licence. Dumping radio licence areas also means you can decouple content and spectrum. That means spectrum is potentially more valuable when auctioned, because the purchaser no longer has to provide their own content services as a requirement of purchase.

The shift away from licence area also informs the overall approach to regulation of the review: instead of black-letter law based around identified restrictions such as numbers of media groups and enforced by a regulator, it suggests a legislative framework based on principles, which a powerful, independent regulator would then interpret.

And who gets regulated is also affected by this move away from radio licences areas. The review suggests that “content service enterprises”, the clunky name for media outlets, be determined free of issues about licensing and instead revolve around the issue of influence. That means newspapers (online or off) and subscription TV can be brought into the mix.

This raises a philosophical issue, at least for newspapers (pay TV is licensed and regulated under the Broadcasting Services Act now, even though it doesn’t necessarily use spectrum). Why should newspapers be regulated if they don’t use spectrum? They’re not licensed, they’re merely an expression of free speech. But the review counters that newspapers are already regulated now under media ownership laws, so there’s nothing philosophically innovative about regulating them; I might add it was the case until 2006 that foreign investment in newspapers was also specifically regulated (grandfathered for that Yank, Rupert) under foreign investment laws. Even so, the gist of the review case for bringing newspapers into the regulatory fold is, basically, because the community wants influential media regulated. Make of that what you will.

Interestingly, the review has backed right away from the suggestion that it wants to regulate the internet. Indeed, it devoted a specific subsection to taking issue with my coverage of its interim report on that score. The thresholds for “content service enterprises” have been carefully drawn up so as to ensure no internet company — not Google, not Apple — nor Telstra are roped in, although Telstra and Apple come close. Instead, the review identifies 15 potential CSEs (News Limited, Fairfax Media, Foxtel, Nine Entertainment, Seven West Media, APN News & Media, Austar, WIN, Ten, Southern-Cross Austereo, Prime Media, Macquarie Radio Network, DMG Radio Australia, Australia Radio Network, and regional radio network Grant Broadcasters), all of which are broadcasters or newspaper outlets.

Also missing — and the basis for my claim that the interim review proposed “regulating the internet” — is the previous suggestion that:

“… it is not intended that all content providers be classified as Content Service Enterprises. Emerging services, start‐up businesses and individuals should not be captured by unnecessary requirements and obligations. Despite this, all content providers will still be subject to some requirements, such as those protecting children from harmful content.”

Instead, the review simply notes that CSEs be defined in a way that allows for the possibility that in the future, online media could be regulated as CSEs. It’s a neat way of putting off into the future the tricky problem of making Apple contribute to an Australian content fund.

There’s much, much more to the review that we’ll look at in coming days. But it recognises the fundamental nature of the regulatory change and often proposes transitional arrangements. It proposes an entirely different philosophy of media regulation from the one we’ve had for nearly a century, one in which politicians don’t make the key decisions about media ownership through law, merely identify the broad principles of what they want achieved and leave it to an independent regulator to accomplish.

That’s the key reason the review will never be implemented. Politicians won’t relinquish control of media regulation in that way. There’s too much at stake for them. And in any event, this government is in no fit state to undertake a major overhaul of media regulation, not even with as effective a minister as Stephen Conroy in charge. Never mind the numbers in Parliament, that’s because media reform creates winners and losers, and the winners tend to keep quiet and the losers protest long and loud.

Someone powerful always ends up grumpy at the outcome of any changes to media regulation. Don’t expect any action until after the next election, when the Coalition inherits the analog mess that our media regulatory framework is rapidly becoming.

2 thoughts on “The regulation revolution of the Convergence Review”

Of course regulating content service enterprises could be like regulating electoral boundaries: so subject to partisan influence that parties agree that it be done by an independent body to keep it out of the hands of the other side.

Unfortunately the media perpetuates the myth that it has pure motives as a public service when 99% of it is simply a profit creating enterprise and the pursuit of profits will always come first in it’s decisions.

At the same time no-one really wants over regulation. Turnbull is just mixing it of course as much of Australia’s media happens to perpetuate a story line that helps his party, at this time.

I believe as Justice Leveson mooted during his current inquiry-that an easily accessible defamation tribunal with poweres would solve many of the problems we face with a biased media. Such a body would be beyond political manipulation.